The City of Phoenix and Salt River Project (“SRP”) have entered into two agreements that help Phoenix safeguard against drought. The first was a 40-year well capacity agreement that expires on July 31, 2058. It was followed by a 10-year storage agreement that expires on September 30, 2028.
The well agreement provides Phoenix with 20,000 AF/year of capacity in SRP’s well to recover Long Term Storage Credits (“LTSCs”) owned by Phoenix. SRP can curtail its obligation to Phoenix if the Annual Physical Pumping Goal for the Salt River Valley Water Users’ Association exceeds 350,000 AF. But if that happens, SRP and Phoenix will meet to discuss alternative or contingency plans to make sure Phoenix’s water needs are met.
Under the well capacity agreement, Phoenix will pay a series of charges, including a capacity charge of $12.3 million to be paid up front to reserve the capacity in SRP’s well system. SRP is charging a usage fee of $55.82/AF for the first 100,000 AF requested and delivered cumulatively over the contract and an excess pumping fee of $151.57/AF for any water requested and delivered over that amount. Both the usage fee and the excess pumping fee are escalated annually by 3% or the increase in CPI for the previous 12 months, whichever is greater, and the excess pumping fee is subject to reevaluation every 10 years. In addition, Phoenix will pay a one-time contract administration set up fee and an ongoing contract administration fee, which are tied to SRP’s actual costs to set up, program, and administer tracking and reporting of pumping and deliveries. Water transportation charges will be assessed pursuant to an existing agreement executed between the parties in 1997.
The storage agreement will provide Phoenix access to 15% of SRP’s available capacity at the Granite Reef Underground Storage Project (“GRUSP”) and at the SRP Groundwater Storage Facility (“SRP GSF”). For the space at the GRUSP, Phoenix will pay the operating costs attributable to its water, with the maximum total payment over the 10-year contract term calculated to be $1,939,620.
The SRP GSF is set up so SRP pays for water deliveries that are used in-lieu of groundwater pumping. For the volume delivered under the storage agreement, SRP’s payment obligation is reduced by 50% from the amount it would pay under a previous agreement with Phoenix for in-lieu water.
The parties entered into the agreements to ensure that the Valley region has resilient water supplies in future droughts and Colorado River shortage conditions.
“Providing ample and reliable water supply continues to be one of Phoenix’s highest priorities,” said Mayor Thelda Williams. “This partnership with SRP is a smart and creative plan to safeguard against continued drought and will allow us to use our stored water supply in future times of shortage.”
“These two agreements with Phoenix are examples of the type of regional partnerships that are necessary to ensure a reliable and adequate water supply during these times of drought and possible future shortages on the Colorado River,” said SRP President David Rousseau. “In working with Valley cities such as Phoenix, these two recharge facilities offer a combined total storage volume of nearly 150,000 acre-feet per year that will allow al us to take further advantage of the infrastructure investments that have been made over the last 25 years.”
Written by Marta L. Weismann